Afternoon roundup

The worthies on the closing of the browser tabs:

• A database of global film subsidies. Remember that the only winning move is not to play. 


• "Somewhat perversely, some local councils and contractors are putting workers back on the shovel, because that way they can get Ministry of Social Development funding to train up six workers – whereas using a diesel excavator would train only one person."


• The latest Neumark metastudy on minimum wages.


• Can't kill a zombie stat. RNZ repeats the dodgy BERL alcohol cost number. So does Stuff. Remember: the $7.8b number is just the old dodgy number from over a decade ago, multiplied by GDP growth over the period. That's it. It starts with a dodgy number, then inflates it using a dodgy method that requires that alcohol cost be a constant fraction of GDP. Me on this in the Dom, a couple years ago. 


• Looks like there are going to be delays to any NZ sanctions regime on Russian-held assets. I really don't know why we have an Overseas Investment Office if they can't even figure out how to do this. 


• Lots of NZ kids don't really know how to write or do math.
• Government is subsidising new boilers for some greenhouses and food processors. There is absolutely no need to do this. Process heat is in the ETS. 

Open for business?

Bryce Wilkinson and I go through some of the proposed changes to New Zealand's Overseas Investment Regime over at Stuff.

Well, went through. The piece came out last week, but I'd missed that they'd put it up.

An opening snippet:

Sometimes, being at the front of the queue isn't a good thing.

If you lined countries up in a row, starting with the places least friendly to foreign investment, and ending with the places with the fewest restrictions, New Zealand would be near the front of the queue. In the OECD's 2018 survey, only Jordan, China, Malaysia, Russia, Indonesia, Saudi Arabia and the Philippines were more restrictive – and most countries were far more liberal.

So it is a bit odd to hear Trade Minister David Parker talking this week about the need to tighten up New Zealand's foreign investment regime. The Overseas Investment Act and its implementation need reform, but substantial tightening is not what needs to happen. Are we trying to catch up with China or vault past Russia in these leagues?

Avoiding supply management

Canadians wanting to run a dairy farm have little choice but to deal with Canada's crappy supply management system. 

Well, unless you're the Canadian Government, and you're running a public sector pension scheme, and you want to make investments in dairy, and you know that supply management is crap.

In that case, you have the resource to jump through New Zealand's Overseas Investment Act hurdles and buy dairy farms here, where there's no supply management and you don't have to pay tens of thousands of dollars in quota fees to buy the right to milk a cow.

Here's Radio New Zealand:

The sale of a Canterbury dairy farm for more than $17 million to a company owned by the Canadian government has been approved by the Overseas Investment Office (OIO).

OIO approval was given in November for the purchase in the latest round of decisions for overseas investment of sensitive New Zealand land.

The transaction includes a medium sized dairy farm of 335 hectares and a neighbouring dairy support block of 72ha, also on freehold land at Hororata. They will be combined to create a larger dairy farm.

Applying for OIO consent was Ramsay Dairy Farm Ltd, wholly owned by the Canadian government and linked to a public pension investment scheme.

It isn't the first investment in NZ dairy by the Canadian Government, via Ramsay Dairy Farm Limited. Here's an OIA decision from 2015:

Decision	Consent granted Section 12(a) Overseas Investment Act 2005
Decision Date	12 November 2015
Investment	An overseas investment in sensitive land, being Ramsay Dairy Farm Limited’s acquisition of: a freehold interest in approximately 322.8995 hectares of land at 249 Domain Road, Oxford, Canterbury; and a freehold interest in approximately 34.6068 hectares of land at 282 Domain Road, Oxford, Canterbury.
Consideration	$18,613,673
Applicant	Ramsay Dairy Farm Limited Canadian Government (100%)
Vendor	Oxford Pastures Limited New Zealand (100%) Farm Partners Limited New Zealand (100%)
Background	The Applicant is ultimately, indirectly, owned by the Public Sector Pension Investment Board. The land is currently being used as a dairy farm. The Applicant intends to acquire the land for the purpose of dairy farming and milk production and will engage FarmRight to manage the land for that purpose.

I suppose it saves the Canadian Government from having to buy dairy quota. Would that Canadian farmers could do the same in Canada.

Restrictions on foreign investment - some context

Winston Peters is pushing for more controls on inbound foreign direct investment as part of his coalition negotiations with Labour and with National. Fran O'Sullivan's piece in the Herald suggested that New Zealand's regime is pretty laissez-faire.

Really?

Here's the latest OECD figures. They tally the restrictiveness of rules around foreign direct investment. New Zealand is the most restrictive country in the entire OECD. It is the seventh most restrictive country of the 62 countries they surveyed.

Here's what you get if you plot countries from most restrictive on the left to least restrictive on the right.

The Philippines is the world's most restrictive country, closely followed by Saudi Arabia and Myanmar. Then come China and Indonesia. Jordan is a bit more restrictive than New Zealand, but only barely. Then come India, Malaysia, Tunisia and Mexico, followed by Laos. 

If New Zealand is laissez faire on FDI, I guess Japan's a bunch of anarcho-capitalists and Luxembourg... we don't have a word for whatever that is. 

Overseas Companies

A little known feature of New Zealand's overseas investment regime: New Zealand companies are covered by it if enough of their shares are bought by foreigners.

Here's Calida Smylie at the National Business Review:

Several major listed companies are counted as overseas persons, even though they have no single dominant overseas owner, including Fletcher Building and Air New Zealand.

Agri-business operations are particularly affected by the OIO’s restrictions on land use by foreign people or companies, because once they reach the 25% threshold they must apply to the OIO when renewing or taking on any new leases or buying land.

Other countries chase foreign investment; New Zealand is so enthusiastic about driving it away that it even counts New Zealand companies that wind up with a broad-enough set of owners. I wonder whether this discourages companies from listing publicly.